Which mobile payment model and technology will prevail? The debate rages on with no end in sight. Empower your customers to do it any way they choose, and respond flexibly to emerging consumer demands without engaging in guesswork or waiting for the dust to settle. This series explores the new normal and how you can maintain and gain wallet share by empowering your customers through the mobile payments revolution.
Today’s consumers are adopting new technologies at breakneck speed and rapidly integrating them into everyday life. Payments will present no exception. As customer expectations evolve, financial institutions and merchants must deliver smarter, faster, better, more customized solutions. These 4 emerging tech trends reveal that waiting to define your mobile payment strategy could put you in catch-up mode.
1. Dephysicalization: The End of Stuff
Aside from purists who are willing to pay a premium for vinyl and hardcover books, most of us are rapidly shedding our physical media. Instead of maintaining media centers littered with discs and volumes, we are downloading their digital counterparts (MP3s, MP4s and e-books) and subscribing to on-demand services like Netflix and Pandora. According to Nielsen Soundscan and Billboard, physical music continues its downward sales spiral, closing out 2012 at a 12.8% decline. Meanwhile, digital music sales grew 9.1% last year, now accounting for 37% of all annual albums purchases.
Companies are adapting to the new norm. Sony has shut down Sony Optiarc, its division that makes Blu-Ray and DVD drives for desktop and notebook computers, to focus on products and content consistent with the shift toward tablets and smartphones. Financial institutions have also made strides with paperless statements and online banking – making increased usage of mobile payments a natural progression.
2. Convergence: One Device to Rule Them All
Not long ago, daily convenience and entertainment involved a plethora of electronic gizmos, each with its own carrying case, cleaning kit, instruction book and 1 year warranty. Today, technology is converging into a single device that does it all. The smartphone has become the de facto music player, camera, camcorder, video editor, game console, remote control, remote car starter, thermostat, alarm clock, graphing calculator, personal assistant, navigator, and window to the world. In a few short years, it has gone from inconceivable to indispensible, ingraining itself into our daily lives.
The payments industry has taken notice as new players have started carving out their place in the market. Google Wallet, an Android mobile wallet app leveraging NFC technology that enables consumers to tap and pay using virtual versions of their existing plastic cards. Square got its start enabling credit card transactions for small businesses and now enables contactless payments for Starbucks.
3. Immediacy & Multitasking: Getting It All Right Now
With the implementation of Pay with Square, a Starbucks barista can now see when you enter the store, track your frequent purchases, and in theory, have your short skim mocha ready before you even reach the counter. Emerging mobile technology is enabling merchants to anticipate customer needs and deliver on them instantly. Interest in these 1 to 1 customer relationships is exploding as mobile adoption progresses at Mach speed.
The increasing compulsion to multitask, also seemingly driven by mobile adoption, provides more opportunity for 1 to 1 consumer touch points than ever before. A recent Nielson study found that 41% of tablet owners and 38% of smartphone owners used their device while watching TV at least once a day. A separate study by IAB of 5,000 media-savvy individuals revealed that 63% of people connected to a device the last time they watched live TV, and 15% used more than one device. Both device availability and content are driving consumers to search, share and discuss online. Surprisingly, multiscreen viewers spend most of their time on non-programming related activities such as email, social networking, texting and web surfing, with a significant number engaging in mobile commerce.
4. Accelerating Rate of Change: 8 Track to Fast Track
As technology advances, so do the people using it. Those of us who grew up with records, 8-tracks or tapes tend to have a different propensity for adopting new technology than those who had CDs and iPods. According to a First Data and Market Strategies white paper, 36% of all consumers claim to adopt new technology within the first year it’s available. Among fast trackers – young technology enthusiasts who make and spend money and are always online – that figure is 79%. The same study revealed that almost half of fast trackers already find the concept of mobile wallets appealing. Considering the evolution in payment popularity from cash to checks to debit to credit, this represents a substantial opportunity for financial institutions and merchants to market to an emerging class of consumers likely to be early mobile wallet adopters.
With consumers demanding less stuff that does more and does it faster, now is the time to prepare for the mobile payment revolution. It pays to look beyond the point-of-sale and recognize that mobile technology is transforming commerce in nearly every way. If you’re looking for ways to insulate your business, you may want to rethink your approach.
Visit Datacard Edge next week, and we’ll explain why building a wall around your services has proven an ill-fated strategy.
What indicators have you seen that point to (or cast doubt on) the imminence of mobile payment adoption? Tell us about it with a comment!